China Pauses Stablecoin Projects; Hackers’ ETH Panic Cost $13M

China halts big-tech stablecoin issuance in Hong Kong

What happened

Chinese authorities instructed large domestic tech firms to suspend plans to issue fiat‑pegged stablecoins in Hong Kong. Firms that had been preparing to seek Hong Kong stablecoin licences paused development after the intervention. Hong Kong enacted a licensing framework earlier this year that requires issuers to obtain authorization and meet capital, governance and compliance standards before launching.

Why this matters

Stablecoins are a primary on‑ and off‑ramp for crypto liquidity and cross‑venue settlement. When major potential issuers step back because of regulatory direction, near‑term issuance is curtailed and a specific on‑chain source of liquidity is delayed. This is a concrete regulatory step rather than speculation: an instruction from mainland regulators plus the existing Hong Kong licensing rules creates a materially higher bar for new issuance.

Immediate FX and liquidity implications

Because stablecoins sit at the intersection of fiat and crypto, pauses in issuance can tighten fiat‑linked settlement channels in the short run—especially in Hong Kong and offshore yuan corridors where those products were targeted. Traders and liquidity providers who expected additional stablecoin supply from large tech issuers may face slightly reduced transactional bandwidth for moving value between exchanges, which can amplify short‑term spreads in crypto/fiat pairs and affect flows in related FX pairs such as USD/HKD or USD/CNH. The effect is directional and localized to the issuance channel; it does not itself change monetary policy.

ETH: hacker wallets panicked, turned profits into losses

What on‑chain analysis found

Blockchain monitoring groups tracked multiple wallets linked to prior exploits that sold Ether during a recent price plunge and later bought back at higher levels. The combined position movements resulted in realized losses on the order of about $13–13.5 million across the identified wallets. The data show sell‑pressure concentrated during the sell‑off and subsequent re‑entry on the rebound.

Why this is relevant for Ether traders

These flows are a tangible example of how tainted or attacker-linked funds can become immediate sources of volatility, not just long‑term tail risk. When exploiters liquidate quickly, they can accentuate downside moves; when they rebuy at higher prices, they create wash trading that absorbs orderbook depth. Monitoring on‑chain behavior of known attacker addresses helps quantify short‑term selling pressure and potential liquidity sinks on major exchanges.

Practical takeaways

For short‑term traders and liquidity providers: (1) watch on‑chain outflows from known exploiter addresses and cross‑check exchange inflows, (2) expect periodic idiosyncratic selling tied to such wallets during stressed sessions, and (3) factor in slightly lower stablecoin issuance prospects in Hong Kong when modeling fiat‑crypto corridor liquidity for the immediate term.

Conclusion

Regulatory pressure from mainland authorities has prompted major Chinese tech firms to pause plans for issuing stablecoins in Hong Kong, a clear and verifiable step that lowers near‑term issuance and removes a potential source of fiat‑pegged settlement liquidity in that jurisdiction. Separately, detailed on‑chain tracking shows hacker‑linked wallets sold Ether into a crash and later repurchased at higher prices, realizing roughly $13–13.5 million in losses. Together these items highlight two different but concrete drivers of short‑term crypto liquidity: top‑down regulatory limits on issuance and bottom‑up on‑chain flows from specific actors. Traders should monitor stablecoin licensing developments in Hong Kong and follow on‑chain movements of identified attacker wallets to better anticipate episodic liquidity squeezes and localized FX/crypto flow changes.